South African economy to grow less than 5% in 2021 amid Omicron surge

More than 90 countries impose travel bans on the country ahead of its summer holiday season

The skyline of Cape Town in South Africa. The country's economy is expected to grow 4.9 per cent in 2021, compared with a previous estimate of 5.1 per cent. Alamy

South Africa’s recovery from its deepest economic contraction in almost three decades risks stalling due to the fallout from a fourth wave of coronavirus infections driven by the omicron variant.

Economists surveyed by Bloomberg predict gross domestic product will expand 4.9 per cent in 2021, compared with a previous estimate of 5.1 per cent. Africa’s most industrialised economy is now expected to grow by 2 per cent next year and 2.1 per cent in 2023.

The revisions come after more than 90 countries imposed travel bans on South Africa ahead of its summer holiday season, following its discovery of omicron, and after output fell more than expected in the third quarter.

Prior to the onset of the new strain, the government and central bank predicted the economy would grow by 5.1 per cent and 5.2 per cent respectively, this year.

The evolution of the pandemic and on-going electricity supply constraints remain risks to the outlook. Progress on some long-awaited structural reforms that Finance Minister Enoch Godongwana said the government is targeting by mid-February could bolster output from the new year.